Burial insurance, also called funeral insurance, can cover the costs associated with funeral and burial expenses of the policyholder. Sold by insurance companies and funeral homes, burial insurance policies offer coverage in the same manner a life insurance policy offers benefits to surviving family members. Select policies offer the benefit of pre-planning funerals, allowing the policyholder to select funeral and burial products and services before their death.
The history of burial insurance dates as far back as ancient Rome. Poor citizens, including slaves and military members, joined clubs that collected fees intended to pay for burial expenses. The burial clubs, known as Fratres, met during festivals, at which time members paid fees to continue memberships. Clubs required new members to pay a fee for joining the group, along with contributions of wine for group meetings and meals. When a club member died, family members could file a claim with the club to pay burial expenses.
Burial insurance policies work in the same way a whole life or term life insurance policy works. Whole life policies cover the policyholder from the time the policy is purchased, until his death. Term life policies cover the life of the policyholder for a specific term, such as 10 years, at which time the policy terminates and the policyholder no longer has coverage. When the policies are purchased, policyholders name a beneficiary to receive the money after their death. The intent of the burial insurance policy is to pay for funeral and burial expenses, but beneficiaries can use the money any way they choose.
Coverage and Costs
Burial insurance policies typically have a lower face value than other types of life insurance policies. While term life and whole life policies can have a face value of $100,000 or more, insurance companies and funeral homes offer burial insurance policies in face values of $5,000 to $50,000 denominations. Select policies offer a premium payment for as low as $2 to $3 per week.
Typically, burial insurance policies do not require a medical examination, but terms can require the policyholder to answer questions about medical histories. Select policies can include expiration terms, such as policies that expire at the age of 80 if the policyholder is still living.
Burial insurance providers can offer the policyholder the option of pre-planning funerals and burials. The policyholder can select items in advance of their death, such as caskets, burial vaults and grave markers, as well as services, such as embalming, funeral vehicles and grave digging. Not all policy providers guarantee prices at the time of pre-planning. Exclusive terms in policies might have limits about transferring to another mortuary after signing the contract.
A variety of scams have surrounded the sales of burial insurance policies. According to the National Funeral Directors Association, only 39 percent of its members hold a license to sell insurance. MSN Money recommends researching funeral homes and insurers before purchasing a policy. Consumer recommendations include verification of state licenses of funeral homes and insurance companies, prior to signing a policy contract.
- The New York Times: Burial Insurance, at $2 Per Week, Survives Skeptics
- MSN Money: Tips for Buying Funeral Insurance
- Insure: Tips for Buying Pre-need and Final Expense Insurance
- National Funeral Directors Association: NFDA Member Demographics
- Globe Life And Accident Insurance Company: History of Insurance-Wine was Part of the Initiation Dues for Burial Clubs
- Photo Credit cemetary 2 image by sonya etchison from Fotolia.com
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